DOF to focus on tax, Customs reforms

The Department of Finance (DOF) will work closely with the Department of Justice (DOJ) to speed up the resolution of tax and smuggling cases, and will appoint DOF Undersecretary Gil Beltran as the anti-red tape czar of the agency, Finance Secretary Carlos Dominguez 3rd also announced on Tuesday.

In a forum, Dominguez said that the DOF would accelerate its anti-corruption programs mainly focused on the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR), including the Run After Tax Evaders (RATE), Run After The Smugglers (RATS) and the Revenue Integrity Protection Service (RIPS) programs.

“We will work closely with the DOJ to speed up resolution of 635 pending tax and smuggling cases, amounting to P103 billion in collectibles. It will be a sad commentary on our state of affairs if RATE and RATS have resulted in only five convictions for tax evasion and two convictions for smuggling,” he said.

In particular, the DOF chief said much more effort would have to be exerted towards making tax payment a truly satisfying and simplified experience, by making tax payments more accessible in theory and in practice.

Dominguez said the Bureau of Internal Revenue’s electronic filing saturation would be expanded from the current baseline of 62.5 percent (representing 22 million returns) in 2015 to a much higher figure.

He added that the agency is also looking into expanding the large taxpayer service and improving taxpayer segmentation to get a better handle on the government’s revenue base.

“As things stand, only 2,320 companies account for half of our revenue base. This could not possibly be accurate. Yet we have subsisted on that small number for many years,” he said.

With respect to the Bureau of Customs, the Cabinet official said it vital to rationalize import permit requirements, noting that at present, about 50 regulators issue one sort of permit or another.

He said the excessive requirements impede the flow of trade and unnecessarily burden business operations.

“We will listen closely to the inputs from businessmen as we craft the rules and regulations of the Customs Modernization and Tariff Act,” he added.

“Much of what ails the Customs Bureau is self-inflicted. The sooner we address the problem of a flawed corporate culture at the Bureau, the better off we will be,” he further said.

Dominguez proposed that the BOC try out new processes in ports outside Manila, and if the processes work, then they can be applied in the more crowded Port of Manila.

The BOC might also adopt random audits of shipments, which means that if no defects are found in the random audits, the traders may be exempt from audit for three years, he said
“In addition, we are now studying possible ways we can improve the organizational capacity of our two major revenue agencies,” the DOF chief said.

Among the measures being studied are exemptions from the salary standardization law, increased fiscal autonomy, relaxing strict bank secrecy laws and making tax evasion a predicate crime to money laundering, he added.

Beltran as anti-red tape czar
Dominguez said besides easing taxpayer compliance requirements, the government is also as committed to improving enforcement.

“The directions from the President are clear: we will have zero-tolerance for corruption,” he said.

“On the part of the Department of Finance, I will be appointing shortly Undersecretary Gil Beltran to be the Anti-Red Tape Czar,” he added.

Dominguez said Beltran’s role would be to dramatically reduce the number of steps and documentary requirements in transacting business with the DOF and all attached bureaus.

This will include paying taxes, getting tax refunds, acquiring tax exemption certificates, getting imports released, shipping out exports, registering a business and getting appointments with public officials.

For his part, Beltran said a department order is being drafted to create the DOF anti-red tape team.

“Each unit in the department has a representative in the team because all of the units transact with the public,” he said.

Beltran said the target of the DOF is to cut processes by half by January next year.